IF YOU WAN TO INNOVATE, HIRE PIRATES
Eric of Pomerania was the first monarch of the Kalmar Union, which united the kingdoms of Norway, Denmark and Sweden. Intelligent, visionary, energetic and of firm character, he received the crown at the end of the 14th century and maintained it until 1440, when a sequence of revolts took him from the throne. And then he became a pirate. For 10 years, he lived on looting of merchant ships in the Baltic.
And that is how Eric left one of the most important lessons of innovation: you are not a pirate when you are king.
One of his disciples was Steve Jobs, even though he probably never heard of Eric. But, feeling that Apple had lost its innovative impetus in the early 1980s, he proclaimed, “It is better to be a pirate than to enlist in the Navy.” This spirit marked the beginning of the development of the Macintosh. A small group of renegades, operating off of Apple’s main operations … and the rest is history. Jobs, who at the time was the CEO, and this small group ended up developing, separately from Apple’s core operation, the product for which the company would be best known. And it would change the history of computing. To innovate, they stopped being “kings” and became pirates.
What Jobs saw is a conceptually recognized and historically recorded phenomenon.
In the 1960s, the physicist Thomas Kuhn, analyzing the history of scientific thought, found that there is a “normal science”, where dominant paradigms determine the current scientific investigation, its rules and its scope. In “normal science” there are no substantial innovations, only increments. Both the questions and the interpretations of the results are delimited by the current structure. There is simply no room for revolutions within the paradigm. For there to be a Scientific Revolution, a rupture must occur. It needs to come from the pirates outside.
In the economy, this phenomenon is well explored as well. Joseph Schumpeter’s “Creative Destruction” is about that. In the view of Schumpeter, one of the most important economists of the 20th century and who placed innovation at the center of the economy more than 100 years ago, the new cannot be achieved by successive increments of the old. And this is in the very nature of capitalism and wealth creation: “economic progress, in capitalist society, means turbulence”. Turbulence is the pirates looting.
Clayton Christensen, a professor at Harvard University and a celebrated author, described this same phenomenon when he created the concept of disruptive innovation. Well-managed companies are efficiency machines. They are tirelessly moving towards standardization and regularity. Maximize their positioning. Until everything changes. And opportunities arise in the exploitation of these irregularities.
In a constantly evolving world, maximizing the current paradigm is the path of irrelevance. An illustration of this bloody battle is that only one of the twelve companies that were originally at the Dow Jones in 1896 continues to compose the index.
In a constantly evolving world, maximizing the current paradigm is the path of irrelevance.
Another index, the S&P500, shows that the average duration of firms decreased from 61 years in 1958 to 25 years in 1980 and 18 years today. In this analysis, made by Richard Foster, of the Yale School of Management, 75% of the S&P 500 companies will be replaced by 2027.
Between regularity and survival, companies need to develop two-speed strategies. It is essential to combine operational efficiency with the ability to reinvent itself. Knowing how to create regularities and, at the same time, make room for the complete revolution.
Nokia, whose origins are in the mid-19th century, was a world leader in cell phone sales for years — a market in which the company was a pioneer and itself disruptive. In 2012, market leadership was lost to Samsung. And in 2015 Microsoft bought Nokia. At that point, in his last speech, the Nokia CEO said: “We didn’t do anything wrong, but somehow, we lost.”
To do everything right is to play the game by the rules. Pirates do not respect the rules. The company that just wants to get it right is building firm bases on quicksand. The world changes and the company gets in the way.
Gary Hamel, professor of iconoclastic business and one of the most influential thinkers of business strategy, said that in situations of constant change, innovation is the only insurance against irrelevance. And the necessary innovation is not incrementalism. No one needs a sequence of steps forward if what lies ahead is an abyss.
On the other hand, in this changing world, it is necessary to avoid paralysis by doubt. The problem with radical innovation is not uncertainty. It is a lack of sense of purpose. The future does not arrive, it is built.
The problem with radical innovation is not uncertainty. It is a lack of sense of purpose. The future does not arrive, it is built
Who turned this spirit into a mantra was Facebook, who wrote in his “Little Red Book”, distributed to employees: “If we don’t create what will kill Facebook, someone will”.
The pirate way to innovate is to find the central purpose, which unites, inspires and moves the organization, and then is willing to destroy everything else. The revolution is made by those who clearly understand its unique value proposition. And they understand that nothing else matters. There are no kingdoms to defend and no fear of sailing into the unknown.
And plunder your enemies, and yourself, on the way.
*originally published on November 4th 2016 at LinkedIn
